CHAPTER
1
INTRODUCTION
1.1
Overview
The twenty first century is a century of changes that are happening faster than
ever. Changes that are in line neither with the past nor with the future and they are
the consequences of events and conditions totally disconnected with the trend of the
past (Iranzadeh, 2002). To face these challenges, organizations must be prepared to
have more flexibility in their structure (Fulmer et al., 2000).
Nowadays in the business environment, firms realize that it is crucial to adapt
their businesses. They try to change their business from one that simply results in
financial gains to a business that tries to find ways to keep competitive. These days,
leaders do not concentrate solely on profit-earning activities. They use strategies to
inspire and connect employees to give more to the organization for achieving the
needed results (Savage-Austin, 2009). Cameron and Quinn (2006) stated that for
continued survival of the organization, there is a need for leaders to continually
assess their strategic position and align the organization‟s idealistic purpose with the
organizational overall mission, goals and objectives.
In organizational environments where unpredictability and uncertainty are
created by changes and there are many complex problems, the need for leadership
development is very important (Beeson, 1998; Conger, 1993; McCall, 1998;
O‟Toole, 2001).
Leskiw and Singh (2007) emphasized that in the business
2
environment, leadership development is a perception that becomes more and more
critical and increasingly strategic for organizations.
There are many challenges for organizations of all sizes to prepare leaders
who can guide the organization in an unstable environment. If organizations want to
be successful, they must spend money in making leadership skills at different levels
of their organization (Block and Manning, 2007). However, there are considerable
quantities of studies on leadership and leadership development; researchers are still
grappling to understand the leadership development phenomenon. This study was
designed to find out what leadership skills need to be developed for an effective
leadership development program to cultivate successful leaders through their
influence on the effectiveness of Iran‟s oil industry.
1.2
Background of the Problem
Leadership development is an area in which many leaders and managers
recognize its importance but many of them acknowledge the lack of effective
programs to develop leadership skills and practices (Osborne, 2011). It is obvious
that organizations that attempt to develop successful leaders and have suitable
structures and culture in their organization, and also have the strategic leadership
programs, will be better prepared for challenges (Miller et al., 2001). Leadership is
considered as a foundation of competitive advantage in many organizations. That is
why more organizations give more attention to develop their leaders (McCall, 1998;
Vicere and Fulmer, 1997).
Leadership development is not just the consequence of conventional
programs in training like a simple classroom, but rather is the result of series of
activities, which are interrelated as well with the purpose of employee development,
with this happening through self-discovery via their job and their leaders (Beeson,
1998; Bennis, 1999; Brown and Posner, 2001; Cacioppe, 1998; Collier and Esteban,
2000; Day, 2001; London, 2001; Tichy, 1997; Tichy and Cardwell, 2002; Ulrich and
Smallwood, 2003). A leadership development has to be merged in organizational
3
daily practices and also has to be considered as a part of the culture of the
organization (Brown and Posner, 2001; Cacioppe, 1998; McClelland, 1994; Senge,
2006; Tichy, 1997; Tichy and Cardwell, 2002; Ulrich and Smallwood, 2003).
Effective leaders set direction, motivate, inspire, and align people (Savage
and Sales, 2008). Leaders encourage employees to develop their abilities and skills
and then they promote learning organizations. Finally, proactive leadership can
improve an organization‟s effectiveness.
Several managers recognize that there is a lack of formal process for
developing new and current leaders who possess the appropriate skills, talents, and
perspectives needed to suppose positions of leadership (Cadrain, 2005; Collins and
Holton, 2004; Taylor, 2004).
Researchers emphasize the need for leadership
development, while they believe that there is less attention on growing leaders in the
workplace. Therefore, leadership development is faced with lack of strategies in the
organizations and there is a need for preparing and developing leaders (Day and
O‟Connor, 2003; Giber et al., 2009; Greengard, 2001; Kaplan-Leiserson, 2004;
Study, 2008; Weiss and Molinaro, 2005).
In recent years organizations recognize that they cannot assure the job
stability of their employees anymore. There are many factors like illness, retirement,
attrition and more profitable job offers which may cause instability in an
organization‟s workforce (Rothwell, 2005). Therefore, guaranteeing the future of the
organization becomes vital for this unstable organizational environment. To achieve
this guarantee, organizations are trying to make sure that key positions always being
filled.
It was also argued, that leadership is not a narrow concept for managers at top
levels of organizations. Hersey and Blanchard (1998) explained that if leaders are to
be successful in leading across varied situations, they have to have analytical ability
and flexibility at all levels of the organization. Many organizations recognize that
the only way which can satisfy them about the existence of executive talents that
4
they need in the future‟s competitive world is by growing the leaders themselves
(Byham et al., 2000).
Leadership development is vital within modern successful firms (Foster,
2006). The main focus of successful organizations is to establish a complete system
of assessment and leadership development practices which can support most of the
key talents in the whole organization (Groves, 2007). Leadership development sets
up an understanding and perspective of leadership method and practice in
organization (Avolio and Bass, 2006; Tubbs and Schulz, 2006). As almost all types
of leadership development have been based on one or more leadership theories or
approaches (Bass, 1990; Day and O‟Connor, 2003; Schriesheim and Neider, 1989),
in order to find the best leadership development program it is first necessary to focus
on finding the best leadership skills and attributes which need to be developed in the
organizations.
Kouzes (2003) argued that there are many definitions and opinions
concerning leadership, and as such, there is not a single method of leadership that is
perfect for all circumstances. There is a chronology of leadership styles in academic
literatures. Four phases of leadership theories, which are introduced by researchers,
are trait, behavioural, situational and new leadership theories (Ghasemi, 2003;
Luthans, 1989).
Coyle (1997) researched and summarized the leadership characteristics which
emerged from the findings of trait, behavioural and situational theories.
He
described five common and comprehensive themes as leadership characteristics and
behaviours including group thinking, resetting direction, guiding cooperative actions,
walking the talk and motivating others.
In the fourth phase of leadership theories - new leadership theories- which
emerged from late 80‟s up to now, transformational, transactional and servant
theories of leadership received more attention. Kouzes and Posner (2007) explained
that leadership is a set of practices and behaviours, not a position. These practices
provide a guideline for the organization‟s leaders to achieve goals or to perform their
5
work.
These practices appear as the necessary components in transformational
leadership concept.
The practices include “challenging the process, inspiring a
shared vision, enabling others to act, modelling the way, and encouraging the heart”
(Kouzes and Posner, 2007; 14).
Bass (1990) added that highly effective leaders would display two types of
behaviour (transactional and transformational leadership). To prove his assertion,
Bass (1990) presented the complete model for leadership incorporating leadership
qualities of both transformational and transactional leaders. Avolio and Bass(2006)
developed characteristics of transformational and transactional leadership including:
“idealized influence (behaviours), idealized influence (attributed), inspirational
motivation, intellectual stimulation, individualized consideration, contingent reward,
management-by-exception
(active),
and
management-by-exception
(passive)”
(Avolio and Bass, 2006; 96).
Furthermore, some of authors and researchers believe that the servant
leadership model is concerned with fundamental characters (Kouzes and Posner,
2007). The positive characteristics of servant leadership summarized in Page and
Wong (2000), Bartholomew (2006) and Goodly (2008) are: empowering others,
authentic leadership characteristics, participatory leadership characteristics, inspiring
leadership characteristics, visionary leadership characteristics, and courageous
leadership characteristics.
This research used the leadership skills and behaviours based on the previous
theories of leadership to find the most important leadership skills to develop.
Furthermore, leadership development is a process that improves leadership
capabilities and organizational performance and effectiveness (Amagoh, 2009;
Bandura, 2006). Therefore, to find the relationship of leadership development and
effectiveness, this study used the variables of effectiveness outcomes which are
driven from the Bass and Avolio model. According to Bass and Avolio (2000),
extra effort, effectiveness, and satisfaction are by-products from leaders who
supplement transactional with transformational leadership.
6
On the other hand, many researchers have discussed that training the leaders
can help them to enhance the efficiency, effectiveness and productivity of the
organizations (Ladyshewsky, 2007; Leard, 2010; Noe, 2002; Sahinidis and Bouris,
2008). In addition, training can affect people in a way such that it can change them
to become successful leaders and is essential for leadership development success
(Bennis and Nanus, 1997; Conger, 1992; Hurt and Homan, 2005).
Moreover, knowledge sharing is an important issue that has an influence on
organizational development and performance (Mohd Bakhari and Zawiyah, 2009).
Knowledge sharing also has influence on organizational effectiveness and can
improve it (Olivera, 2000; Yang, 2007) while helping organizations to meet their
goals (Cong and Pandya, 2003; Reid, 2003). In addition, many researchers have
developed several aspects of leadership which are influenced by knowledge sharing
(Abhishek, 2001; Allee, 2000; Bartol and Srivastava, 2002; Berends, 2005; Bhirud et
al., 2005; Ellis, 2001; Greengard, 1998; Lin, 2007; Marks et al., 2000; Mathieu et al.,
2000; Okhuysen and Eisenhardt, 2000; Srivastava and Bartol, 2006; Van den Hooff
and De Ridder, 2004).
As a result, not only does the review of literature provide support for the
notion that training is necessary to develop leaders and have an effect on leadership
development and organizational effectiveness, but also, knowledge sharing can
improve both leadership development and organizational effectiveness. Therefore,
training activities and knowledge sharing are considered as moderator variables in
this study.
This study had been done in Iranian private oil companies. From the year
2006, Iran‟s government started a privatisation plan to overcome the imbalance of
economical policy, which used to control 80% of economy by government. The
implementation of this privatization‟s plan became very important in Iran‟s oil
industry as Iran economy is mostly depend on its oil and gas exports (Ilias, 2010).
The effectiveness of the new privatized companies depends on the abilities of their
leaders to overcome the new challenges.
Without competent leadership, the
economy might fail (Ilias, 2010). A better understanding of leadership development
7
related to their effectiveness in private companies might also help improve the Iran‟s
economy.
1.3
Problem Statement
Organizations are dealing with many complex challenges. Some of these
challenges include leadership gaps in ethical decision-making; competing in a
universal environment of work; encouraging honesty between employees; retaining
and developing talent; keeping up with technological advances and business changes;
and leading within a more diversified structure (Charan, 2004). Since the new
millennium, organizations‟ experiences have changed. Therefore, leadership styles
must change as the old ways of leading might not be suitable anymore (Lynham and
Chermack, 2006).
Almost all of the leadership concepts have been well understood and
discussed as very important practical subjects by researchers (Campbell et al., 2003).
Effective leadership, leadership development and succession planning are important
concepts for today‟s organizations for achieving organizational success as well.
Making the skills of the leader is the main concern of the leadership (Duncan and
Pinager, 2002).
Nowadays, the demand for leadership positions has increased.
These
positions need special people with special abilities and skills such as the ability of
concentrating on customers, creating effective strategies, conducting performance,
working collaboratively and developing other people (Holt, 2011).
Executives
increasingly express the need to focus on initiatives like leadership development, but
in fact only some of them consider developing leaders as a part of their business
strategy.
This came from research concluding that while most organizations
emphasized the need to grow leaders, less than 50% of them really had systematic
procedures of leadership development (Giber et al., 2009).
Therefore, these
organizations are not effectively ready to face the changing environments of their
businesses.
8
Leadership development programs are often fragmented and lack an overall
strategy that is embedded successfully within the organization (Weiss and Molinaro,
2005). Some sad events like the Asian tsunami disaster highlight this fact that
organizations may suddenly lose their helpful leaders. Therefore if organizations
want to be stable and move forward in this competitive world, they always need to
have alternative leaders (Greengard, 2001).
Day and O‟Connor (2003) stated that there is a lack of experiential evidence
and systematic approach in leadership development. They mentioned there is a need
for scientific research in leadership development. Theoretical contrast is present in
which, as there is increasing interest to improve leadership development, the lack of
effective leaders exists and the need for bearable leadership development planning
grows faster (Kaplan-Leiserson, 2004).
In a study called “Global Human Capital” which was released by
International Business Machines (IBM), some interesting reading was provided and
the rising significance of leadership in organizations was highlighted. In this study,
which is the result of interviews with four hundred human resources executives from
forty countries, researchers suggest that organizations are putting their growth
strategies at risk if they are not able to recognize and develop the next generation of
leaders. The report also highlights the concerns the companies have in developing
future leaders (Study, 2008).
In order to replace the leadership position, many companies currently use
succession planning, but the main problem still exists which is the lack of knowledge
and perception of developing the specific leadership needs of these emerging leaders
(Collins et al., 2000; Holt, 2011). Hiatt (2009) based on a survey of Centre for
Creative Leadership Newsletter concluded that leaders recognize that leadership
skills can be developed during leadership development program, but they openly
acknowledge the lack of effective programs designed to develop leadership abilities
in order to meet company goals and objectives.
9
One of the most important challenges of many organizations is to create a
successful leadership development program. However, before creating a leadership
development program, finding the leadership development needs perceived by the
current leaders for the future is required (Holt, 2011).
The reasons of ineffective leadership programs and the suggestions to create
more effective leadership development programs are mentioned by many
researchers. For example, Cacioppe (1998) explained that there is a need for a full
range leadership development experiences i.e. training. Collins and Holton (2004)
asserted that enhancing the knowledge and skills of individuals will improve the
effectiveness of each company. Boyce (2004) asserted that to supplement formal
leadership programs, organizations and their leaders are becoming more and more
dependent on individual self-development. Despite the organizational and individual
benefit concerns with professional self-development, little research has been done on
the topic.
Holt (2011) stated that the initial need of leadership development
programs is to find leadership skills and abilities; in addition, he asserted that as there
is not an evaluation model which sufficiently measures the effect of leadership
involvement which is needed to improve the performance and effectiveness of
organizations, such a model can cover the sparse of leadership development studies.
In fact, leadership is not just an individual phenomenon. It is a phenomenon
with complex aspects which is included in the interactions between three
components: people, leader and organizational environment (Porter and McLaughlin,
2006; Vera and Crossan, 2004). Senge (2006) supports this idea since he argued that
the vision of old leadership was individualistic and non-systemic. But in the new
vision of leadership, the responsibility of building the organization in which
individuals can increase their ability to learn and can understand the idea and the
complexity of the organization, is by leadership.
Most leadership development approaches try to illustrate the steps of
developing leaders e.g. (Block and Manning, 2007; Cacioppe, 1998; Leskiw and
Singh, 2007; Weiss and Molinaro, 2006). Some research shows that the focus is on
the effects of processes like coaching, mentoring, life experience and goal orientation
10
on leadership development (Edwards, 2009; Hymes, 2008; Moniz, 2008;
Scriffignano, 2009).
The view point of some researchers in this field is that
characteristics and practices need to be developed e.g. (Fulmer and Conger, 2004;
Klagge, 1997; McCauley and Douglas, 2004).
Hymes (2008) believed that further research is needed to recognize the skills
and abilities that emerging leaders need in order to develop their effectiveness levels
and to recognize the approaches which can help them to identify the gaps in their
current skills. He believed that in order to measure leadership development, using
servant leadership instrument and transformational leadership assessment have many
advantages. Besides he explained that using other instrument or combination of such
instruments may provide better measure for leadership development.
As a matter of fact, many researchers believe that finding leadership
development behaviours, characteristics and skills is very important part of
leadership development (Campbell et al., 2003; Tubbs and Schulz, 2006). “All in
all, leadership development should develop the character, integrity, skills and
discursive intelligence necessary for the responsible exercise of power” (Storr and
Trenchard, 2010; 479).
However, while some researchers focus on the
characteristics of leadership development, almost all of them consider only one
leadership style in order to assess leadership development. Most of them concentrate
on transformational leadership characteristics (Carter, 2007; Davis, 2007; Ryan,
2007; Warner, 1997). In some cases, researchers concentrated on developing servant
leadership values as the best method for leadership development (Goodly, 2008;
Greenleaf et al., 2003). However, using the vast range of leadership values can have
advantages for each leadership styles. Goodly (2008) in his research used the servant
leadership values to define leadership development. He suggested that comparing
servant leadership values by other form of leadership like transformational,
transactional, direct and situational leadership traits can provide contribution to the
study.
Lyman (2010), explained that the field of leadership development has been
greatly criticized for its lack of theoretical development and careful empirical
11
research. One of the challenges related to the leadership development is to build
effective programs that maximize leadership talents in the organization. Although
many researchers documented the need for effective leadership development
programs, it has been difficult for organizations to create leadership development
programs in a way that meet the individual‟s needs and achieve the organizational
goals (Holt, 2011). To create an effective program for leadership development and
build the future leaders there is a need for a combination of different skills and
abilities. Finding the necessary abilities and skills is one of the difficulties of
leadership development programs (Holt, 2011).
For example, Rathgeber (2009)
asserted that there is lack of research to investigate the effect of a leader‟s oral
communication skill with follower‟s and organizational performance. Orrell (2008)
believes that nowadays, leaders are faced with a new generation of employees that
are going to challenge the leadership abilities of organizations.
These leaders‟
creative and innovative ability is one of the challenges that must be addressed to
satisfy the needs of this coming age (Pink, 2005).
Leadership development is concerned with developing a more extensive
structure in which leader‟s skills and abilities are able to be developed (HernezBroone and Hughes, 2004). Development of leadership at all levels has great impact
on firm performance and effectiveness (Conger, 1993; Day, 2001; McClelland, 1994;
O‟Toole, 2001). One important question that needs to be considered in leadership
development is: To what extent leadership development has an impact on
performance.
It is still not proven that how much continuing professional
development influences the performance (Muijs, 2011; 53). Therefore, an effective
leadership development program is needed in which leaders inspire the commitment
of followers toward the goals and vision of the organization (Wright, 2007).
In addition, Amagoh (2009) stated that researches need to find out how to
develop the competencies of the organizational members in order to improve
performance. In some cases, the attitude of autocratic leaders causes poor employee
performance (Van Maele and Van Houtte, 2009).
Furthermore, Turo (2010)
explained that future research has to concentrate on the value and benefit of
leadership development of both organizations and participants. He also stated that
12
utilizing different leadership models and theoretical frameworks would lend a greater
understanding in leadership development.
Kaplan-Leiserson (2004) stated that
regardless of the increased attention to leadership development programs, a lack of
leadership material continues to exist with few effective development programs in
place to encourage the growth of future leaders.
Holt (2011) explained that more research is needed to be conducted in order
to examine the development of leadership development programs and also to
question if such programs affect organizational success. In fact there is a lack of
research to show how a leadership development program with a set of leadership
activities can result in the outcomes and therefore, there is a need for more studies in
this area (Russon and Reinelt, 2004).
Therefore this study aims to identify leadership development programs based
on developing the leaders‟ skills to increase effectiveness in organizations. In spite
of the fact that leadership development has had a great impact on effectiveness, there
is no solid model in leadership development and its impact on effectiveness. On the
other hand, while challenges related to leadership development can be recognized in
many world organizations, the importance of this subject in many developing
countries like Iran is an undeniable fact.
Iran is located in the Middle East. It is almost 1,648,195 square kilometres
and its population is more than 70 million people. The Caspian Sea is located in the
north, and in the south, the Persian Gulf and Oman Sea are two important areas of
the region in which oil and gas were found (Girshman, 2004). The oil sector in terms
of its contribution to GDP (Gross Domestic Production) and the share of oil revenues
in terms of budget and resources of the country's currency has an important role in
Iran‟s economy (Asali, 2004).
Until the year 2000, public organizations in Iran controlled 80% of Iran‟s
economy. To overcome this imbalance, the government of Iran started to privatize a
number of enterprises that were managed by the government (Khajehpour, 2000).
The government started a broad privatization plan from June 2006 (Ilias, 2010). For
13
the recently privatized companies to be efficient, effective, sustainable, and
economically viable, leadership within the companies must overcome a lack of
essential skills, competencies, and knowledge. In the public sector‟s leadership
model, the authority and power is centralized at the top of organization, but in private
organizations leaders must shift from the public sector model to a decentralized
model in management (Abbas and Amirshahi, 2002). In this decentralized model,
they are faced with challenges of leading complex organizations (Bolman and Deal,
2003).
In fact, ineffective leadership in some organizations has been recognized as
one of the most serious difficulties confronting developing countries, including Iran
(Mosadegh Rad and Yarmohammadian, 2006). Babae (2004) believes future Iranian
managers would not be able to lead the organizations with global standards, and also
would not be able to create global capacity.
To reach these goals, Iranian
organizations need to have scholastic planning for developing their leaders. Thus,
some issues like succession planning and leadership development are amongst
important concerns of Iranian organizations (Babaei et al., 2004). Medhin (2007)
asserted that exploring and understanding current Iranian leadership practices and
skills may benefit organizations struggling with privatization.
Although the problem related to organizational leadership development in
Iran‟s private sectors is important, it becomes more challengeable in Iran‟s oil
industries because Iran is extremely dependent on oil exports as the most important
source of income (Ilias, 2010). The oil sector in terms of its contribution to GDP
(Gross Domestic Production) has an important role in Iran‟s economy, the same as
the share of oil revenues in terms of budget and resources of the country‟s currency
(Asali, 2004).
Although Iran‟s economy is mostly dependent on oil income, there is general
mismanagement of the oil company (Khajehpour, 2000; Yeganeh and Su, 2007).
Hooseini (2008) asserted that in spite of public opinion that the oil industry in Iran
uses proper manpower, it actually does not have enough human, managerial and
professional resources proportionate with its vast need of professionals. In some
14
cases qualified human resources in Iran have been recruited to take the job, without
being provided with proper education during the job period (Nasimi, 2001).
Mohammadi (2007) stated that according to information contained in Iran‟s
human resource system, managers in Iran‟s oil industry are an average age of 51
years old. Considering the high average age of these employees, a lot of managers
are near retirement. So, in this situation, having a leadership development program
is vital for the organization. In addition, having a key plan for developing managers
and concentrating on future planning and creating an appropriate culture for these
plans are important issues (Mohammadi, 2007).
On the other hand, beside the important role of training in development of
leaders, it illustrated that only about 10% to 15% of training programs result in longterm transfer of learning in the work In addition, in spite of the importance role of
knowledge sharing in organizational development, Robertson (2004) has asserted
that in practice knowledge sharing is not effective in organizations. Krogh (2003)
also stated that there is a need to direct further attention towards knowledge sharing
within the organizations.
The Iran‟s oil industry is also faced with problems in terms of training and
knowledge sharing from within. For example, Asmariyan Nasab (2003) states that
studies of Management and Organization Planning (MOP) in September 2003, the
Iranian managerial database indicated that many of the senior managers were not
sufficiently qualified in management training.
In many cases, knowledge,
managerial skills and experience of managers were not seen as part of their
responsibilities. We cannot find many top managers in public organizations or in
industrial enterprises that started their professional job from a basic level and reached
higher positions through enhancement of their capabilities and talents. Most of the
problems for Iran‟s future organizations are matching these organizations due to
growth and change (Babaee et al., 2004). In fact, education and training are the two
most important parts of effective leadership development (Hunt, 1999). Tohidinia
and Mosakhani (2010) also, emphasised the lack of research about knowledge
sharing in Iran‟s oil industry.
15
Invariably, leadership development programs do not prepare people to take
leadership responsibilities.
In many cases, the lack of quality leadership
development is related to lack of training design (Yukl, 2006).
There is not
sufficient research on the effectiveness of empirical leadership training programs
(O‟Neil, 2010). In addition as Yukl (2006) stated there is limited research that
evaluates leadership and knowledge-oriented processes and outcomes.
In conclusion, the problems can be divided into two phases. Firstly, while
many researchers emphasize the need for leadership development, there is less
attention on growing leaders through on-the-job development. Therefore, leadership
development is faced with a lack of strategies and programs in the organizations and
the need for preparing and developing leaders still remains (Day and O‟Connor,
2003; Giber et al., 2009; Greengard, 2001; Holt, 2011; Kaplan-Leiserson, 2004;
Lyman, 2010; Study, 2008; Weiss and Molinaro, 2005).
The second phase of the problem is related to the private organizations of
Iran. While the oil industry plays a very important role in Iran‟s economy, it is faced
with a lack of professionals and human resource management (Hooseini, 2008;
Khajehpour, 2000; Yeganeh and Su, 2007). To overcome such problems, developing
leaders is the most important factor in the Iranian oil industry especially for the
companies that go through privatization (Medhin, 2007; Mohammadi, 2007;
Mosadegh Rad and Yarmohammadian, 2006).
Moreover, in preliminary interviews with six managers of three oil
companies, it was concluded that there has not been enough study on leadership
development in these companies. It is good to know that the all of the interviewees
emphasized developing leadership programs in order to reach better outcomes in
their organization. For example, in an interview, Mr. Mansoor Khadem, the manager
of developing human resource in Esfahan Oil Refinery Company, said there is a need
to work on leadership development programs in their company (Khadem, 2010).
On the other hands, while organizations have been assessing the benefits
gained from investments by leadership development, most of them have failed to
16
consider the outcomes of their leadership development programs. Therefore, such
organizations may not be able to identify problems or keys require for the systematic
change (Amagoh, 2009).
In addition, as Aghaee (2008) explained, effectiveness in Iran‟s oil industries
is a managerial concern and they have to give more attention to increase
effectiveness from their leaders, managers and employees (Aghaee, 2008).
Therefore, one of the leadership goals is effectiveness (Conger, 1993; Day, 2001;
McClelland, 1994; O‟Toole, 2001; Wright, 2007).
Although, some researchers such as Day (2001), Campbell et al. (2003), and
McCauley and Van Velsor (2004) concentrated on leadership development skills,
none of them carried out any empirical research and also they did not consider the
effect of such skills on the leaders or employees‟ effectiveness. It is a considerable
gap in the literature especially by considering some resent researchers‟ explanation
who clarified the lack of careful empirical research in leadership development
(Lyman, 2010) and the need for exploring leadership development skills based on
their effects on organizational effectiveness and success (Holt, 2011).
On the other hand, as reviewing the literature showed transformational,
transactional, and servant leadership as the most important leadership styles which
can positively affect the organizational effectiveness. However, some researchers
concentrated on the values of these styles in their leadership development program
(e.g. Goodly, 2008; Carter, 2007; Davis, 2007; Ryan, 2007; Greenleaf et al., 2003),
all of them focused on one of these style. There is lack of studies about the needed
skills of these styles and comparing and considering these skills in a leadership
development program , whereas, Goodly (2008) in his research suggested that other
researchers has to compare the values of servant leadership with other form of
leadership such as transformational, transactional and situational leadership in
leadership development programs.
Based on all mentioned problems and gaps in the literature, this study is
designed to find out kinds of skills and abilities necessary for developing leaders in
17
regards to the impact of these skills on the effectiveness outcomes. The findings are
essential for building the appropriate leadership development programs. The results
of this study might add to the body of knowledge of Iranian leadership development.
These results might increase the speed and quality of programming of leadership
development and enhance effectiveness within the Iranian oil industry.
1.4
Research Questions
The background and the problem of the study highlighted several questions to
be addressed. This study is going to answer these questions:
i.
What are the leadership skills which need to be developed in Iran‟s oil
industry?
ii.
What are the effectiveness outcomes of leadership development in
Iran‟s oil industry?
iii.
What is the relationship between leadership development and
effectiveness in Iran‟s oil industry?
iv.
Do organizational training activities moderate the relationship between
leadership development and effectiveness in Iran‟s oil industry?
v.
Do knowledge sharing practices moderate the relationship between
leadership development and effectiveness outcomes in Iran‟s oil
industry?
1.5
Aim of the Study
The main aim of this study was to find out what leadership skills need to be
developed for an effective leadership development programs to cultivate successful
leaders through their influence on the effectiveness of Iran‟s oil industry.
18
This study was designed to show the relationship between leadership
development skills and its possible organizational effectiveness outcomes. It is also,
important to note that training activities and knowledge sharing are two important
issues which can help the process of leadership development to achieve more
effectiveness in organizations. Therefore, evaluation the moderator‟s effect of these
variables on the relationships was another specific purpose of this study. This study
was aimed to provide information that help companies in preparation their leadership
development plans especially those developing the leadership skills that are
emphasized in developing effectiveness.
1.6
Objectives of the Study
As objectives in this study, five goals are to be obtained.
i.
To find out the skills that leaders need to develop in Iran‟s oil industry.
ii.
To determine the effectiveness outcomes of developing leaders in Iran‟s
oil industry.
iii.
To find out any relationship between leadership
development and
effectiveness outcomes in Iran‟s oil industry.
iv.
To investigate the moderating effect of organizational training activities
on the relationship between leadership development and effectiveness
outcomes in Iran‟s oil industry.
v.
To investigate the moderating effect of knowledge sharing practices on
the relationship between leadership development and effectiveness
outcomes in Iran‟s oil industry.
1.7
Scope of the Study
The scope of this study is limited to finding most important leadership skills,
which need to be developed in leadership development programs and their
19
relationship to effectiveness outcomes including leadership effectiveness, employee
performance and employee satisfaction. The introduced leadership skills covered the
ones needed in transformational, transactional and servant leadership styles and,
moreover previous researchers‟ viewpoints in leadership development.
Training activities and knowledge sharing practices are identified as
moderators in the relationship between leadership development and effectiveness.
Training enclosed the extent that each person spends on formal training programs.
Knowledge sharing covered donating knowledge to others and collecting knowledge
from them, which is needed for leadership development programs. Literature context
and questionnaires helped to identify and analyse the framework.
While Iran‟s economy is dependent on the oil industry and its significant role
in its economic development, the process of data collection was held within the
several private oil companies including Esfahan Oil Refining Company, Shazand
Petrochemical
Company,
Esfahan
Petrochemical
Company,
Fanavaran
Petrochemical Company, Petroiran Development Company, National Iranian Oil
Engineering and Construction Company.
1.8
Significance of the Study
Regarding the lack of systematic research on leadership development and
initial need of combining leadership skills and abilities in order to provide an
effective leadership development program, this study used both quantitative and
qualitative methodology to find out the relationship between leadership development
and its effectiveness outcomes.
The first significant contribution of this study was to find the most important
leadership skills which need to be developed in a leadership development program.
This was done by combining skills and abilities of transformational, transactional
and servant leadership and by considering the integration development of human
20
capital and social capital. Organizations that have obvious vision for developing
future leaders, supporting organizational structures and have a systematic plan to
utilize leadership development programs would be ready for the challenges of the
future (Leskiw and Singh, 2007). In successful organizations, in order to develop
the leadership capacity, they use a variety of developmental activities (Brittingham,
2009).
Effective leadership development programs still remain evasive.
This is
because of the difficulty of creating a program that develop employees‟ leadership
skills and abilities, and having internal learners who are able to self-reflect (Hanna
and Glassman, 2004). The findings of this study are also expected to contribute to
finding any relationships between leadership development and effectiveness
outcomes. This was due to the fact that it has still not been proven how much
continuing professional development influences performance. Considering the effect
of leadership development on performance and effectiveness is one of the needs of
leadership development programs (Muijs, 2011; Turo, 2010).
Behind identifying the relationship between leadership development and
effectiveness, the study has provided an insight about the moderating effect of
training and knowledge sharing in the relationships.
The research has also
contributed to the improvement of knowledge in the field of leadership, especially
those qualities and skills that are emphasized in a developing effectiveness of
organizations which work in the developing countries like Iran.
All in all, the results of this study provide information that may help other
companies in preparation of their future leaders as well as assist comparable
companies in Iran‟s oil industry to develop effective leadership development
programs. This would only happen by understanding the essential leadership skills
which need to be developed in order to increase effectiveness in the organizations.
The outcome of this research has generated new issues, concepts, and ideas for future
leadership development research.
21
1.9
Conceptual Definitions
Following are some definitions of the terms used in this study.
1.9.1
Leadership
Organizational leaders are individuals who influence other employees to
reach the desired objectives (Northouse, 2007). Leadership points to a process which
is involved in the personality and behaviours of the leader, the follower‟s perception
of the leader and the context in which interaction between leader and followers take
place (McCallum and O‟Connell, 2009).
Leadership represents the skills and
abilities to influence individuals towards the goal‟s attainment as well as guide the
follower‟s attitude in the work environment. As Kouzes (2003) explained leadership
is a set of skills and abilities used by people to influence their employees and the
environment around them.
1.9.2
Leadership Development
Leadership development is a process of developing the skills and behaviours
of organizational employees to take on the leadership role more effectively (Day,
2001). This concept refers to every form of growth in a person‟s life in order to
expand his/her expertise as a leader. In fact, developing skills and knowledge which
are needed to optimise the potential and performance of leaders is considered as
leadership development.
These skills are defined in this study as inspiring vision, building the
environment of trust, team work, communication, motivating others, creativity and
problem solving, and empowering others. Developing and promoting these skills
formed the concept of leadership development.
22
1.9.2.1 Developing Inspiration of Shared Vision
Successful leaders inspire their vision to share the future they try to create.
Inspiring the shared vision is one of the leadership abilities which need to be
developed in order to create a clear image of future. It helps employees to have a
better understanding of future organizational goals and give them a pathway which
facilitate their decisions making. Therefore, leaders have to develop these skills in
themselves by improving their speech about the future needs, values, and they must
upgrade their delivery to establish enthusiasm about the future.
1.9.2.2 Developing the Environment of Trust
Trust is the most valuable quality of leadership. “The confidence that the one
who leads will act in the best interest of those who follow, the assurance that s/he
will serve the group without sacrificing the rights of the individual” (McGee-Cooper,
2003; 13). Statton (2011) also believes that building an environment of trust is one
of the leader‟s abilities which help them to be an effective. Developing leaders
require the skill to create environments of trust and support with those they lead.
Improving the environment of trust by leaders requires encouraging the followers to
follow their promises.
Leaders also have to walk their talk, being honest and
committed to quality outcomes themselves.
1.9.2.3 Developing Team Work
As Holt (2011) explained team working is one of the leader‟s skills needed in
improving the leadership development programs. An effective leadership
development program needs to gather employees together and encourage them to
work as a team, as people in a group can achieve more than work individually.
Leaders must have the ability to build teams, while helping others and supporting the
team‟s results. Working as a team needs to be open to diverse opinion. Then leaders
have to upgrade their vision to be open-minded.
23
1.9.2.4 Developing Communication
Developing communication skills helps leadership development to be more
effective. In fact, effective leadership depends on effective communication. To
exchange information, ideas, plans, and vision between employees and leaders,
communication skills such as listening skills are necessary. It also helps to build
more motivation and team building within the organizations.
leadership
development
program,
leaders
have
to
In an effective
improve
their
verbal
communication. Treating others with respect and listening carefully to their ideas are
the ways to raise communication efficiency between leaders and followers.
1.9.2.5 Developing Motivation in Others by Accrediting Them
The ability to motivate others makes up an important part of developing
leaders. One of the significant issues in the leadership development structure is the
development of the leader‟s interpersonal skills in order to motivate others to act. It
is one of the leadership skills like celebrating employee achievements, encouraging
them and giving rewards to them that increases employee motivation. Investing in a
leader‟s credibility depends on records of achievement, devotion, and also their
expression of what and how objectives require completion. Based on the argument
of Lussier (2006) one of the most important considerations to the success of each
organization is to create a good reward system by its leaders. Often, an appropriate
system which accredits people would encourage workers to accept and apply new
approaches.
1.9.2.6 Developing Creativity and Problem Solving
Leadership development programs have to contribute something new,
surprising and interesting to the participants about the world they operate in. In
addition, creative thinking is one of the skills of leaders which need to be developed
in a leadership development process. Enhancing the leader‟s creativity is defined as
bringing something new that lets people to accomplish a level that they were not able
to do before. They have to generate alternative solutions to problems by examining
24
new approaches. Besides, leaders must create an environment that encourages and
supports new ideas and innovations.
1.9.2.7 Developing Empowerment in Others
Developing others is one of the social skills of leaders which has to be
developed in a leadership development process. Successful leaders have this ability
to help the employees to feel competent and powerful. In that case they usually
consider the interests of other people.
In order to have effective leadership
development, leaders must spend time and energy in helping others to overcome their
weaknesses. They have to serve others rather than be served. Coaching, mentoring
and monitoring are some leaders‟ skills with which they use to improve the work of
their employees.
1.9.3
Effectiveness
How well an organization is meeting its recognized goals is called its
organizational effectiveness. Leadership development is a process that improves
leadership capabilities and organizational performance and effectiveness. Evaluation
of the effectiveness outcomes of leadership development programs are one of the
important parts of leadership development.
Leadership effectiveness, employee
performance in regards to their extra efforts and employee satisfaction are introduced
as the most important effectiveness outcomes in this study.
1.9.3.1 Leadership Effectiveness
Increasing leadership effectiveness is one of the main targets of all leadership
development programs in order to steer organizations through eras of change.
Leadership effectiveness means a leader‟s success in influencing followers to meet
the organizational goals. Leading an effective group and meeting task-related needs
are defined as leadership effectiveness. It also, describes how a leader meets job-
25
related needs and outcomes and leads an effective team from the perspective of
subordinates: “Effective leadership within an organization is often viewed as the
foundation for organizational performance and growth.
Organizations that lack
strong leadership are likely to fail meeting performance expectations” (Vardiman et
al., 2006; 94).
1.9.3.2 Employee Performance
Employee performance will increase as a result of proper leadership
development. When employees know what they need to do in their jobs, they can do
it effectively.
One of the most important factors in determining employee
performance is their extra effort. Extra effort means doing more than expected. It
can be the ability of leaders to get others work harder, and generate a desire in others
to be successful. Developing leaders‟ skills give them the abilities of enthusiastic
followers who try hard to achieve better results.
1.9.3.3 Employee Satisfaction
Developing leaders have an influence on the satisfaction of their followers.
As Madlock (2008) explained, leaders play the critical role in employee satisfaction.
Without appropriately skilful leaders, employee satisfaction will suffer. Employee
satisfaction at work depends on the actions of their leaders. Employee satisfaction is
one of the measures which determine the organizational effectiveness and
performance. Satisfaction when working with other people determines employee
satisfaction.
An employee‟s satisfaction with their leader makes them more
motivated and committed to attain organizational and group goals.
1.9.4
Training Activities
Successful organizations are using training activities to improve the quality of
work, efficiency, effectiveness and productivity in the organization and increase the
26
performance of employees (Ladyshewsky, 2007). Proper training can prevent many
disastrous errors and mistakes. As Thomas and Cheese (2005) explained, the aim of
leadership training is to educate the trainees allowing them to develop their abilities
and skills, resulting in enhancing their performance on the job. Success of each
training program is measured by its effectiveness. Traditional training programs do
not work anymore.
Recent programs may be some programs like 360-degree
feedback, Job assignment, Action Learning, Case study, Role play, and Job rotation.
1.9.5
Knowledge Sharing Practices
Knowledge sharing is distribution and transferring knowledge between
people in organizations. The process of knowledge sharing practices is divided into
two factors as knowledge donating and knowledge collecting. Donating knowledge
entails giving others the intellectual capital by an individual, whereas knowledge
collecting involves a person to collect intellectual capital by talking to other
employees. Knowledge sharing can help the leadership to raise the effectiveness in
the organization. Then one of the responsibilities of leaders is to facilitate the
exchange of knowledge and information among members.
1.10
Outline of thesis
This thesis includes five chapters. Chapter one, gives an overview of the
research topics. It presents the background of the study and problem statement. It
also discusses study questions, aims and objectives. Chapter two comprises of a
review of the literature. Some of the topics which are reviewed in this chapter are
leadership, leadership development, organizational effectiveness, leadership training
and knowledge sharing. At the end of the chapter, the conceptual framework and
hypothesis are considered. Chapter three justifies the research methodology used in
collecting and analysing data. Chapter four includes factor analysis and examines
27
the hypothesis.
In addition, the result of post-hoc analysis is presented in this
chapter. Chapter five discusses the findings and highlights the contribution made.
1.11
Summary
Organizations that wish to survive in chaotic and challenging environments
have to develop their leaders at all stages. In both private and public organizations,
developing leaders is a vital and strategic issue.
While the need for effective
leadership development programs is an undeniable fact, there is a lack of research in
this field. One of the preliminary needs of leadership development programs is to
find leadership skills and abilities which need to be developed in such programs.
However, as Holt (2011) explained, there is not an evaluation model of leadership
development which sufficiently measures the effect of leadership involvement needs
to improve the performance and effectiveness in the organizations, such models can
cover the gap of leadership development studies.
The other challenge of leadership development is to find the effect of it on
organizational effectiveness. In fact there is a lack of research to show how a
leadership development program with a set of leadership skills can result in the
outcomes of organizations. Therefore, the main aim of this study is to find out the
leadership development skills which need to be developed in order to receive high
effectiveness, performance and satisfaction in the organizations. The findings of this
study are expected to add new insights to the body of knowledge of leadership
development and are also expected to provide the information that can help
companies in preparing their future leaders.